Millionaires Need Love Too Ya Know

One of my graduate school friends recently found himself out of a job. It was a tough slog, but at last, he and his co-founders decided to shutdown their startup and start something new. Nobody is really going to feel sorry for Greg, as he joined Google the year they went public and cashed out on a couple million dollars in stock options over the next 4 years.

His $180,000 a year salary was nothing to sneeze at either, but also nothing too spectacular in the land of $1 million dollar starter homes. In a nutshell, Greg is the typical Silicon Valley success story who busted his butt to get ahead, networked like no other, and fell victim to a downshift in the economy these past couple years.

There are literally thousands of millionaire 30-somethings in the San Francisco Bay Area who are underemployed or just not working because they haven’t found that great idea, or that premium company fit yet. Why should they bother wasting a companies’ time and enlist only to quit 6 months to a year later when something better comes along? That’s not fair to the company and so they do the right thing and wait.

When I asked millionaire Greg about his thoughts on the government extending unemployment insurance to 99 weeks he let out a big “YIHAW!” You see, Greg has been collecting unemployment insurance for the past 16 weeks via the solvent state of California, and he is worried that Obama will crack down on people like him once Federal care starts kicking in.

A MILLIONAIRE’S TAKE ON COLLECTING UNEMPLOYMENT AS A MILLIONAIRE

“Sam, I’ve paid my fair share of taxes, and yet I still feel like I’m being persecuted by big brother. When the first unemployment check for $450 came in the mail, I felt a little guilty, so I saved it. But, after a while I realized that I was simply getting the money back that I had contributed to the system for the past 10 years!”

“There shouldn’t be a difference between who can and cannot collect unemployment benefits. I might be doing slightly better than the average unemployed person out there, but I’m still looking for a job too you know. What makes a poorer unemployed person better than a rich unemployed person? Nothing.”

“Anybody in my situation is generally sick of how the government imposes restrictions on small businesses and entrepreneurs. Well, I took some risks with some old colleagues, and we failed. The $200,000 I invested in the business is real money. If the government wants to raise taxes on the people who make things great, then it is only right that we get back some of the money we gave to the government. “

“I just don’t understand why people like myself who work so hard are being vilified by the masses. What did we ever do to them? The economy really is big enough for all of us to make our fortune. Before, you had to spend hours in the library looking up research. Now, all you gotta do is Google something, do some plagiarizing, and voila! You got your essay. The slacker kids of the world should be thanking me and all my ex-colleagues at Google for allowing them to work even less!”

“I paid more than the average person into unemployment insurance since I made more than the average person. It’s simple math really. 10% times $180,000 = $18,00 a year = $180,000 in contributions over the 10 years I’ve been working! Meanwhile, the median salaried unemployed person working for 10 years in the Bay Area only contributed about $80,000 ($80,000 X 10% X 10 years). I deserve my money, especially since there’s a cap on unemployment distribution!

“$450 a week isn’t that much Sam. I mean, I just dropped $300 bucks on drinks tonight for all our free-loading fools! I got to be honest, I want to join free-loader nation as well, but then I remind myself that I paid $216,000 into the system over the past 10 years! The government expects me to live off $150 for the remaining 6 days? One steak dinner for two and my weekly budget is wiped out. Give me a break!”

After the 5th drink…

“The great irony is that I’m a hard core Liberal/Democrat who like many, are all for extending unemployment benefits to as long as possible while I was working. So weird that once I stopped working, and started collecting, I’m afraid to tell anybody I am collecting. Liberals of the world, unite!”

“Is that girl looking at me funny? I hope she isn’t a mean Republican.”

“Do you think it’s too hot to go to Prague in August for a couple weeks?”

AND SO WE REASON

Greg clearly believes he shouldn’t be discriminated against for collecting unemployment just because he’s rich. Greg also doesn’t believe in discriminating against your race, sex, or creed either. Greg is a pretty modern guy, wouldn’t you say?

Your toes might start curling and steam might start erupting from the top of your head after reading his statements, but do recall that these are sound bites from a private conversation. Ask yourself, what’s it to you that Greg is collecting money from the government? You might just find out that the problem is with you!

Greg isn’t going about smugly proclaiming to all his friends that he’s a multi-millionaire who is getting some $1,800 a month in unemployment insurance for the next 99 weeks. No, Greg pretends to be glum about the job prospects of the economy to his friends and family. Greg was very generous with his unemployment benefits that night at the bar. Now, if he decided to buy us bottom shelf drinks, that’s another story!

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of all the chaos. After 13 years of working in finance, Sam decided to retire in 2012 to utilize everything he learned in the business to help people achieve financial freedom sooner, rather than later. Sam is a big advocate of using free financial tools like Personal Capital to help people grow their net worth, track their cash flow, x-ray their portfolios for excessive fees, and plan for retirement. The more you know about your money, the better you can grow your wealth!

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Comments

What a wheeze. Unemployment benefit isn’t a bank account that you pay into and draw upon when you see fit – it’s meant to be a safety net for the truly deserving poor.

Greg should surely get a job if he needs money. It doesn’t have to be something fancy that’ll cause upset when he leaves – he could work a few hours in a bookstore. Of course, perhaps he can’t get a job in the severe downturn in the US.

I guess I vaguely see where Greg and you are coming from but I speak from personal experience — I have always turned down benefits here in the UK, even when I graduated into a recession and jobs were thin on the ground. True, the state had paid for my entire education, so I felt doubly guilty sponging off it.

Very interesting post and topic Sam, but no, personally I don’t feel any more sorry for Greg then I did for what’s his face the millionaire wildlife photographer. :)

I think the system is broken, and some people’s justification for why they need government help, is pathetic. I guess I have a more proactive attitude where I kind of just roll with the punches and make due with what I can. I would have to be on my last ounces of resources before I claimed anything from the government. I just think there needs to be more accountability for who gets what from the government. Being on unemployment and buying $300 in drinks, is like being on food stamps and buying $50 in lotto tickets – God knows how many times I have seen that one

I have no problem with millionaires collecting unemployment, if they are not working – that’s their choice. It’s called unemployment insurance and Greg is unemployed right.

However, I personally would not do collect if I could find a job. I have been working 23 years and I collected 2 weeks of unemployment insurance about 20 years ago. I have been very lucky to have been employeed for the same company for 20 years and I hope to remain employeed until I retire. I will happily not get back the thousands of $ that I have paid into the system.

Regarding your question, “Anybody coming around to the idea that it’s wrong for those 47% not paying taxes to raise taxes on the other 53% yet?” Abolutely not! I still do not even get the question. I work and pay federal income taxes. However, let’s assume I do not. I would still want to be able to vote for whoever I like and they will then vote however they think they should vote on all matters – taxes and everything else. The only logic I can make out of your question is, should we only let the 53% of people that pay federal income tax have the ability to vote in federal elections. So if a multimillionaire is able to take advantage of the US tax code and pays no federal taxes the in 2011 would you agree they should not be able to vote in the 2012 presidential election? Or a senior citizen that has worked 40 years always paid federal taxes when they worked but now does not pay any federal taxes, would they also not be able to vote in federal elections?

BTW, Greg, enjoy your time away from work. However, after a while I wish you good luck finding another high paying job – we need you back earning a lot of money and thus paying federal taxes.

Sam, I disagree on your conclusion that only people who pay taxes should be able to vote for candidates who raise taxes. It creates a mentality of “us versus them”, and it’s also completely arbitrary. Where you you draw the line? At $1 tax paid? At $10 tax paid? At $100? $1000? $10000? Who can you vote for? Someone who will raise taxes by $1? $10? $100? $1000? $10000? It’s as impossible to calculate as the individual cost/benefits of taxes.

I am all for a completely voluntary society, but I acknowledge that change must be gradual to prevent riots and uprisings. SS, UI, etc… are all fundamentally flawed, because they force people to pay for them, and they bail out everyone regardless of circumstance.

I am not religious, but I am with the Christians on the virtues of charity and voluntary aid. The truly poor in this city get plenty of support in terms of food, clothes, and shelter, and much of it is provided by voluntary giving. I believe charity would be much higher if not for the fact that people are already forced to pay, whether they want to or not, and this sets people against each other.

“Why should I help the bum out? He already gets welfare! Screw him. I know too many people that abuse welfare.” <– This attitude is caused by blanket taxation and redistribution.

When it comes to UI, I have three thoughts:

* Recovery would come faster, and the original bust wouldn't have been so bad, if the people didn't demand that houses be available to everyone, ability to pay or no, and that housing prices go up forever and that government do whatever it takes to make it happen. The voters are in part responsible for this, since this is what they asked for.

* If you spent all your money on houses, cars, and TVs during the good times, and saved nothing, you get no sympathy from me. Prices are about supply and demand, and a heavy bust would drive prices down so far that those young people just starting out would find it so much easier to get into the market, as well as those who had saved. That is where recoveries come from. Super high asset prices only help those who own the assets, not those who need to buy the assets.

* If you believe that people are inherently good, then you should also believe that people don't want to see children and families starving and dying in the streets. In a wealthy society, even the poor are well off, and there is always charity for the least fortunate. In poor societies such as in Africa, people unfortunately do die from starvation, but that is not because they don't have enough taxes. It's because they don't have enough wealth! It's because they have shitty rules and shitty governments, as well as bad aid policies. Those are all conditions that prevent prosperity from increasing.

You can take these thought processes as far as you want. I argue that although fully voluntary societies weren't possible in the past since predation was so easy and everyone was poor, it is entirely possible for wealthy societies where even the poor are relatively well off!

I don’t have a problem with Greg collecting unemployment benefits. He paid into the system and it’s his right to collect when he needs them. We shouldn’t assume that he has plenty of cash just because he has a million dollar house and earned a nice salary with stock options. There are plenty of people out there that we would think are wealthy by looking at them, but in reality they have lots of stuff and no cash. They could be riddled with debt and struggling to keep up with their payments.

Besides, if you’re going to set an income limit on who is allowed to collect unemployment…who sets the limit? If you’re earning $50,000 a year you might think a fair limit would be $150,000. They should have enough money put aside to live off and they can always downgrade a bit too instead of living such a lofty lifestyle right?

Well maybe the guy who is trying to support his family on $22,000 a year is thinking the same thing about you.

That’s a good point on debt and stuff. It’s not like Greg was making millions of dollars a year. HE was only making 180K, and so happened to have options on stock that went from $100 to $400+ while he worked there!

Actually, I don’t disagree with your friend. He is right, he did pay taxes all those years, and he is unemployed. Therefore, he is within his rights to draw unemployment. Would I do it as a millionaire? I don’t know. However, I can see where he does feel discriminated against since this country seems to think rich people should pick up the slack for everybody.

Greg is 1000% correct (well up until he arrogantly started bragging about spending the unemployment money on drinks lol).

He paid into the system, that is why the system exists. What if his millions are tied up in non-income producing assets (i.e. his home)? He should be forced to sell his home? and at what level do you start forcing those to sell their home? If it is worth 250K? should they liquidate?

I think a few people said, just get another job…but can’t you say that to ANYONE on unemployment? Go be a bagger at a grocery store.

The only reason why you think he’s bragging is b/c I wrote it in a post. Other than that, he’s very humble and hush hush.

Just get another job? If that was the case, there would be practically ZERO unemployment b/c everybody would just get another job, b/c there are jobs for everyone out there, just not the “right wages” for everyone out there to accept!

It’s really a fine line you’re getting into. Once you start limiting who can get something it can get into dangerous grounds.
There are people that take advantage of unemployment like Greg as well as those that just live off of unemplyment instead of getting a job. But once you start limiting access to it you could get into a situation of leaving people out that actually do need it. To me it’s worth it to have open access to make sure that all those that need it can get it in exchange for some people taking advantage of it because people always will find a way to abuse the system.

Another problem with setting a “must be only this wealthy to collect unemployment” bar is that you end up with a situation like the Alternative Minimum Tax where it doesn’t change to reflect the cost of living and ends up being a giant hassle for all concerned.

Besides, even for the wealthy, unemployment benefits are the best kind of stimulus available – since unemployment benefits tend to be spent immediately rather than hoarded.

a) The assumption that others don’t work as hard as Greg. I daresay the cleaning woman who comes into our office every night at 5 pm, or the guy working on road construction on the highway I drive as I leave, works every bit hard as “poor” Greg if not harder, under far more adverse conditions and for a lot less money.

b) The reference to the “masses,” those inferior, unwashed peons so clearly beneath Greg and his millionaire friends.

This is not about me or my alleged insecurities or taking it personally or populist rage or any of the rest of this nonsense.

Apparently Greg has every right to collect unemployment checks under the laws of his state. He doesn’t even have to feel guilty about it. If he’s feeling guilty, or pressured, or whatever, that’s coming from inside him, because he recognizes at some level that he’s gaming the system.

I’m sure also that under the laws of his state, Greg has an obligation to actively look for work; otherwise he’s abusing his benefits. From what you’ve said, he does not appear to be looking very hard. Someone who says “YIHAW!” when he learns he can stay on unemployment for 99 weeks, or “pretends” to be glum about his job prospects when he isn’t, or is thinking about a vacation in Prague (Spain is much hotter in August) is someone who seems to be taking the situation as a huge joke.

I have no idea if Greg is a real person or a fictional example Sam has created, but during the one period I was unemployed (NJ, March-October 1991), I had to document each week what job openings I had applied to, how many resumes I sent out, what interviews I went on, etc. There were also employment counseling sessions (totally useless) and re-training programs (really worthwhile; I was entitled to take a course in computer programming, which I left only because I got a full-time job). As best as I can recall (it was a very painful period I’d rather forget), I had the right to look for comparable work to my previous job. But I couldn’t just treat these benefits as a vacation period where I got $400 or whatever courtesy of the state for six months or so.

The acid test for me is, would Greg be as candid with an unemployment counselor in the state of California as he was with Sam having drinks at a bar? I somehow doubt it.

As for “masses”: words have meanings and connotations. The word “masses” connotes people one considers inferior, common, etc. The lower orders.

Your statement:
“The assumption that others don’t work as hard as Greg. I daresay the cleaning woman who comes into our office every night at 5 pm, or the guy working on road construction on the highway I drive as I leave, works every bit hard as “poor” Greg if not harder, under far more adverse conditions and for a lot less money.”

Your logic is false as more than likely Greg did a lot of work to get where he was.
He more than likely works in a highly skilled position.

– College and time to study (not including the costs for college)
– The risks in working for a startup

So you are incorrect. Many people can be a construction worker, or clean for a
living. Just so I am clear, I have no issue with people wanting these careers.
To say these types of careers require the same amount of training, education, risk
taking and costs to get into those fields is absurd. Heck most construction workers
and cleaning job are union based. The reason for unions is because they are
low skilled jobs to protect the worker.

So while everyone mentioned might work “hard” on a daily basis,
not all careers require the same effort and skill.

IJ, where’ve you been? You usually can’t wait to jump all over me (lol).

The basis of my statement was the opposition I quoted above. “I just don’t understand why people like myself who work so hard are being vilified by the masses.”

There is plainly an opposition here in Greg’s mind: people like Greg who work so hard, and the masses who by implication don’t. But you’re erecting a straw man argument here. I have no doubt that Greg busted his butt, and underwent a great deal of training to accomplish what he has. But whether the guy who lays asphalt on the LIE has had that much training is irrelevant. He works just as hard.

I like how you are turning to the conservative movement Larry! You are correct. Just say no to unemployment extension as you know as well as others that there are thousands more cases out there who are unemployed who are taking advantage of unemployment benefits since the benefits account for a great percentage of their pre-unemployment paychecks!

First, I’m not a liberal, but I believe since you paid that money in, you are entitled to that money!

Larry, as a former construction worker laid off, you are entitled to look for work of comparable value (at least in my state). Also, the person that Sam is talking about said that he is looking for work, so I don’t see where the fraud element comes in to play…

Try re-reading this passage: “Why should they bother wasting a companies’ time and enlist only to quit 6 months to a year later when something better comes along? That’s not fair to the company and so they do the right thing and wait.”

I don’t know CA law per se, but that doesn’t sound like “looking for work” to me. Does it to you?

I was going by the passage that Greg wrote:“There shouldn’t be a different between who can and cannot collect unemployment benefits. I might be doing slightly better than the average unemployed person out there, but I’m still looking for a job too you know. What makes a poorer unemployed person better than a rich unemployed person? Nothing.”

Perhaps I don’t understand the “but I’m still looking for a job too you know” line, but it seems pretty obvious to me that he isn’t committing fraud… Perhaps you interpret that line differently???

a) When I asked millionaire Greg about his thoughts on the government extending unemployment insurance to 99 weeks he let out a big “YIHAW!“
b) I got to be honest, I want to join free-loader nation as well.
c) Greg pretends to be glum about the job prospects of the economy to his friends and family.
d) “Do you think it’s too hot to go to Prague in August for a couple weeks?”

(“You are required to actively seek work and … to attest to that fact each time you file a weekly payment claim.”)

Or that he’s particularly ethical:
“Before, you had to spend hours in the library looking up research. Now, all you gotta do is Google something, do some plagiarizing, and voila! You got your essay.”

Perhaps, but I bet Greg gets part of his identity from his work. I don’t think he is sitting at home watching the soap operas on TV.

When people like Greg are unemployed, they tend to think of ideas. Many of them probably start their own business.

I believe in my fellow men and women, and I think if they are industrious enough to make a million… they are not slackers by default.

If Sam follows Greg in a future post, I’m betting that he’ll have some sort of gig going on!

And beside my little take on the matter.
Greg paid that money into workman compensation.
Greg is unemployed.
Greg is searching for work.
Greg is entitled to that money.
It’s as simple as that… :)

Why make life complex? It’s not like somebody else isn’t getting money because he is getting what he paid in…

Besides he probably lives in a city where it takes 10 million to even get close to being financial independent… So why should he bleed when he paid that money in for such a case. He’s not even making close to what he made previously…

i can see it both ways. he did pay into the system, but as noted above, its not a bank account, the system is meant to help those less well off survive an economic downturn or job loss. if greg doesnt need the money to survive, he shouldnt be taking it out. there are millions of people who need these checks to pay for food and the roof over their head, not drinks at the bar with friends. just my 2 cents
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Unemployed people who are choosing not to work at a job that pays more than unemployment benefits are not doing the right thing at all. Unemployment is for people who CAN’T get a job, not who think they’re too good for the jobs out there, because those jobs aren’t sparkly and shiny enough.

Your friend is certainly within his rights in the current system, but if he could get a job and isn’t (and is still collecting), he’s morally bankrupt. Too bad.

“There are literally thousands of millionaire 30-somethings in the San Francisco Bay Area who are underemployed or just not working because they haven’t found that great idea, or that premium company fit yet. Why should they bother wasting a companies’ time and enlist only to quit 6 months to a year later when something better comes along? That’s not fair to the company and so they do the right thing and wait.”

The purpose of unemployment benefits is not to tide you over while you’re sitting around idly waiting for your next big break. It’s to provide a small amount of income if you are unable to find work. If you *can* find a job and are still collecting, then you’re gaming the system. Committing fraud, in fact. Whether you choose to look for another job once you’re hired is irrelevant.

“Looking for Work – Unless you’re on a temporary lay-off, or remain job-attached, or a union worker, you are required to actively seek work and be physically and mentally able to work as a condition of unemployment collection. You are required to attest to that fact each time you file a weekly payment claim. If, in fact, you do not look for work, lie about looking for work, or lie about being able to work…guess what? You’re committing a crime.”

My father told me about a dentist in his neighborhood who happened to be black. He attempted to open a practice. Six months later my father saw him stocking shelves in a local supermarket. I hope the point is made.

There must be a lot of fraudsters out there then! Greg is looking for work. Can’t he have a drink with his buddies and take a break from looking for work too? Ease up on him, he’s a fellow pro unemployment 99 week extension.

BTW, I have no idea what you are talking about wrt the dentist, and the color of his skin. Care to elaborate further?

There’s at least 3 categories.
1. Unemployed who can’t get ANY job
2. Unemployed who can’t get a job that pays more than unemployment
3. Unemployed who think they’re too good for a job/waiting for the next big break

Sadly, I don’t know the % of each to answer your question though. Greg makes at least 1 :). But from Larry’s comment, it sounds like #2 and #3 are illegal in many places. If Greg is looking for a job of “comparable value” (as Sam, you later indicate your state’s law requires) then I suppose in your state he’s within his rights. But still morally bankrupt.

If what Greg is doing is fraud, how does the state prove he is committing fraud? Maybe a little water torture and finger nail removing to get him to force to the state that he’s not trying hard enough looking?

“We have the right to look for a job we deem suitable for our own interests and skills, especially if there is a nice 99 week time frame to do so.”

I don’t think so. The intention of unemployment benefits was never to let applicants collect benefits to the maximum allowable time. It is to help people who legitimately cannot find work. From your own description, Greg certainly sounds more like #3 than any other type, and I don’t care whether he’s liberal, conservative, or tea party. Morally bankrupt indeed.

This goes back to my other comment about people feeling entitled since they paid in, and they didn’t have a choice about it. There are two problems here:

1) The problem of fairness. Because everyone is forced to pay in, and don’t benefit in the same way, most people see it as unfair in one way or another. They also feel entitled to benefits since they were forced to contribute.

2) The problem of coercion. Because everyone is forced to pay in, they feel that they deserve to extract the benefits back out. That money is also diverted from potentially more productive uses. Greg could have used that money to fund a different startup, and perhaps would have been successful that time around. Otherwise, he could have invested it in the markets, providing additional capital to companies.

Solutions? Well, changes should always be gradual as to not leave people hanging on a thin thread, but still, let’s have a little thought experiment: What would happen if people were able to keep that 12% for themselves? If I was able to keep 12% of my salary, then after 5 years I would have almost 8 months of salary saved, not accounting for compound growth. Is it really right for people to be forced to bail out everyone who has lost their job, regardless of the situation?

Is unemployment insurance really 12%? And there is no cap on this? Seems to me that this is being confused with social security which is 6.25% by the employee and 6.25% by the employer up to a salary limit of about $105K per year.

When I got out of school and joined a fortune 100 company, it was pretty much a given that you would fork over a portion of your salary to their designated charity. I had no problem doing this. So, for 12 years I gave to this charity not knowing where the money went.

Anyway, about that time, my mom had a problem tenant that was behind on rent. The tenant was until recently a welfare lifer and knew the different agencies she could go to to prevent eviction. She asked for some help with filling out paperwork and a month later my mom got a check from the same charity I had been contributing to all this time.

To me, it felt like my contributions had come full circle and helped my mom out of a jam. Good Karma was coming our way when we needed it.

I’m not poor anymore, but I most certainly would collect unemployment. I faithfully contributed for 15 years and I expect that same right be available to me when I need it.

the whole unemployment thing is over rated. it sickens me to see my very capable friends who are not working absolutely milk the system and collect unemployment month over month, when they should be looking for jobs instead of sleeping in.

There used to be a thing in this country called shame. No more. This clown clearly doesn’t need unemployment insurance by the sheer fact that he could be working elsewhere for a “measly” 100K or something instead of the 180K he’s accustomed to.

You stated “Why should they bother wasting a companies’ time and enlist only to quit 6 months to a year later when something better comes along? That’s not fair to the company and so they do the right thing and wait.”

Well, for one, people are so thickheaded they don’t realize that their old salary may NEVER come back, so they should either a) take a job or b) move to where the jobs are and wake up. And also, he’s not doing “the right thing” by waiting.

Able workers should work; it’s a net detriment to the country, the taxpayer, and ultimately, our children who will someday be burdened with the shameful debt of the current generation.

A measly 100K is a 45% DROP in his normal salary. Everything is relative. Why would he rationally want to go out and work for that much less if there wasn’t huge upside?

I definitely think he’s doing the right thing and waiting for the right job to come along. As a hiring manager, I HATE turnover, and if you are going to leave after 6 months or a year, I don’t want you to join.

There is nothing wrong w/ Greg collecting money what he paid in.

You’ve got it good Darwin. Didn’t you proclaim you only pay a 5% effective tax rate or something? Why not spread the government love?

Darwin is absolutely right. A lot of unemployed people have returned to work at lower salaries, because they have had no choice. And $100K is hardly “measly” by any standards.

If he waits for the “right” job to come along he may be waiting forever, while doing his small part to add to the bankruptcy of his home state.

The turnover issue is irrelevant. If as a hiring manager you feel the applicant is not likely to stay, then don’t hire them. If as an employee you feel you want to continue looking, that’s your choice. I see nothing wrong on any side with the employee coming on for 2-3 years and then looking for something new when the economy recovers.

I have in fact visited San Francisco at least four times, though I have never lived there. But information like the following (the first from the Bureau of Labor Statistics) indicates that there are many people working in that area whose mean annual income does not approach the $100K mark. As for his marital or familial status, that is irrelevant. And there is no reason to believe he is eating into his nest egg, since it was established at the outset that he was a millionaire.

It is interesting that there are no rules on how you can spend your unemployment checks. Most people are probably using them to cover housing and food when they’re out of work as those are usually the biggest expenses, but it would be interesting to see stats on how people are really spending those checks. I heard about people in California abusing welfare money to buy alcohol at clubs. These systems have so many loopholes and until they’re closed there will always be people going through them.

Maryland issues a credit card that can only be used in certain areas. No checks! Rent, food (no booze or smokes).
My son in law is out of work. He is the first one in our family to use unemployment insurance. There are four of us employable, and almost 70 years combined putting into the system. Our advice was to take his time and work through it. The average turn around time in the DC area is about four months. Not like he is going to go anyplace exciting on $400 a week (especially since our daughter and grandchild are with us while he looks).
As far as the 99 weekers- they need to MOVE and find a job. No reason for 99 weeks on unemployment.

The FUTA tax rate is 6.2% of taxable wages. The taxable wage base is the first $7,000 paid in wages to each employee during a calendar year. Employers who pay the state unemployment tax, on a timely basis, will receive an offset credit of up to 5.4% regardless of the rate of tax they pay the state. Therefore, the net FUTA tax rate is generally 0.8% (6.2% – 5.4%), for a maximum FUTA tax of $56.00 per employee, per year (.008 X $7,000. = $56.00).

For the State of California:

The California Unemployment wage limit for 2010 remains unchanged at $7,000. The California Unemployment Contribution rate, however, varies from company to company, from 1.5% to 6.2%. The Employment Training Tax rate for 2010 remains at 0.1%.

So, here is the total annual tax, assuming his company paid the highest tax rate to California:

Great find Naomi, and something I was aware of. But isn’t it interesting how CONVULUTED and confusing the system is?

Also, if employer’s didn’t have to pay for this tax, and that tax etc… don’t you think they’ll have more money to pay the employee? Of course they would! All these taxes on this and that serve to DEPRESS wages.

Maybe all of that tax wouldn’t be thrown back into wages, but any costs borne by all employers are eventually paid for by the consumer, so these sort of taxes that “don’t matter” because the “employer pays it” are actually paid for by the consumer in the form of higher prices and the employee in the form of lower wages.

Yes, shame on me. The goal is to get readers to debate their way to the truth. And even the data you stated isn’t the whole truth if you ask any small business owner who pays for unemployment. They will reguarly say they spend 7-10% to cover for employees, and gripe why the employees don’t pay for themselves, which then leads to the employer just cutting employee wages.

Greg probably paid a whole lot more into the system with the progressive tax system we have here! By probably several hundred thousand more actually!

Why should millionaires not get unemployment insurance when they are unemployed? Unemployment payments are not a needs based payments. If your friend had a $180,000 income and lives frugally (relative to his income) on $6,000 a month saving the rest of his money, the weekly unemployment check of $450 covers only a fraction of his expenses. Lower income people get a much larger portion of their expenses replaced by unemployment insurance. Imagine your friend got the same portion paid in unemployment insurance! A lynching crowd might come out and take “good care” of unemployed millionaires.

Brilliant observation! If someone was only making $900 a week, or a respectable $46,800 a year, and got $450/week in unemployment benefits, that’s 50% of his/her income, which is pretty darn good!

Greg makes $3,500 a week, so imagine the outrage lynch mob indeed if he received $1,750/week in unemployment benefits, or $7,000 a month in benefits! That’s only fair though in this scenario yes? Afterall, SF is more expensive than Iowa.

I hate to see anyone who can support themselves collecting anything from the government. The money is supposed to be there for those that don’t have anything else. And in your friend’s case, he has “something else”. What ever happened to pride? Maybe if he’d slow down on the steak dinners, he wouldn’t need the unemployment checks…..

I don’t think one should be discriminated against just because they made a lot of money in the past and may still have quite a bit sitting around in a bank. He did pay into his benefits during his productive years, so he is rightly entitled to those benefits as the law stands today. However, I agree with Charlie (commenter above); there aren’t any specific rules or guidelines that says benefits must be used for certain items such as necessities. It would be interesting to find out how people spend their unemployment checks. I bet if a study was ever completed, the government would enact some new guidelines that would limit the way it is spent.

What if said rich guy got disabled instead. He’s still rich, but his future earning potential might be down the toilet. Does that change how people feel about this guy? And if so, what the heck is the real difference?

The system is in place for people who are between jobs. You wouldn’t expect an accountant to go become a garbage collector, even though they both can pay pretty decent wages.

I also would rather have him make $200K and pay twice the taxes to feed the support programs. I’m still pro-rich guy here.

Just an observation: I’m not sure how things work in California, but here in NJ, unemployment taxes are only deducted on the first $29,700 of your salary. So here, he WOULDN’T be paying more into this particular fund. State and federal income taxes, sure, he’d be paying more… but not into the NJ state unemployment fund.

Hi Sam, I am of the belief that even if one is wealthy and unemployed, as long as they have paid their taxes, then they deserve unemployment. Life is not fair. I think the most incredible part of this story is that your friend and so many others in their early years cashed out with millions from hi tech cos! Is it fair? Is it fair that teachers, cops, & nurses are paid much less than entertainers and atheletes? Life is filled with inequities, but that does not mean that your friend doesn’t deserve unemployment!

It’s true, plenty of folks in their mid to late 30’s did VERY well in the Bay Area since they got to ride the incredible internet bubble. It is an absolute fallacy everybody lost money. Plenty of people made a lot of money. And Google was post internet bubble, and the stock still went up 6X. Right place, right time.

Greg is doing nothing wrong. He was forced to buy unemployment insurance, and now that he is unemployed, he should collect the benefits. Telling him otherwise just because he is rich is absurd. Let him collect what rightfully belongs to him.

Sounds like he got a bit smashed! =) Good thing you were sober enough to remember the whole conversation.

Maybe they should look at assets too, instead of automatically giving someone unemployment cheques when they are actually quite well off.

People here in Vancouver who have “astronaut” husbands (who work overseas but don’t claim taxes in Canada) who are loaded (e.g. huge assets, million dollar homes) but don’t report as being loaded (e.g. no income) still get some money given to them by the government.

I know it’s an expensive area, Genie. I live on Long Island, also expensive, but also with a wide range of prices. Unless you’re disputing the statistics on salary I’ve quoted, there obviously are people in that area who aren’t making money hand over foot, and who manage somehow to survive. If the median is $600K, then there are homes of both lesser and higher value, or couples have dual incomes, or people rent alone or with roommates.

I think he should be able to collect unemployement just like anybody else, but he shouldn’t mooch off the system – nobody should. I’m all for safety nets, but I don’t like all the unemployment “nesting” I hear about. Get a darn job if you can.

Oh, and of course no one feels as sorry for him as the unemployed that aren’t millionaires. I believe the benefits should be available to everyone, but of course I feel more empathy towards people in actual need…that’s just human. Your friend won’t be hungry and hopefully won’t be homeless (although it sounds outrageously expensive where he lives). If he stays unemployed too long, he could think about moving somewhere with a lower cost of living. He could retire and live pretty nice off of interest in some places based on what he has…

Well said Bucksome. I’m surprised by the debate as well. If we have no predudices, I think we’d all be FOR Greg collecting unemployment since he is: 1) unemployed, 2) looking for a job, and 3) paid into the system.

I agree with Bucksome Boomer! Under the current system, they do not ask you about your net worth to determine if you qualify for unemployment, only if you are unemployed (and a few other factors). So, of course he should collect unemployment benefits.

Now, to the question of “should we change the system to look at net worth, or liquid assets?”. That’s a hard call to make. I’m typically against state & federal transfer payments as the government has proven to be very inefficient at almost everything, so that’s a tough one for me.

As someone said earlier, unemployment is there to help support those who worked and are currently unable to find a job. It’s not an emergency fund for every American. However, how do we determine who is needy and who isn’t? That’s truly the problem with all of these transfer payments, how does the government (that is very distant from the individual) determine eligibility?

1. Some states have employees pay into unemployment. Some do not. So it depends upon what state someone is filing for unemployment to determine if they “paid” into it or not.

2. States have different rules about collecting unemployment. In Alaska, it doesn’t matter if you were layed off due to seasonal work, quit to go to school, or fired because you were stealing from your employer. Everyone gets unemployment. So, again, it depends upon what state you were working in.

Until rules are equitable, you won’t have equality regardless of extending benefits for the 100’s of people who are probably working under the table or are self employed. Guess what? That is up to the individual’s honesty to report. lol

This is exactly why unemployment should not be handed out so easily. Yes, he deserves to collect if he CAN’T find a job, but it is not meant to be a 2 year vacation. I also had a friend on funemployment who turned down every mention of a job opening. Only during his last month of government payments did he begin to search for, and easily found, a job.

I prefer the work programs of the Depression era. If you want the money, show up 20 hours a week somewhere and sweep sidewalks, shovel ditches, clean toilets, etc. This would weed out many who only want free money, who work under the table, or are fraudulent applicants.

Ask Greg how he feels about the high taxes he will pay when he gets another 6 figure job that may be required to pay of the money we are borrowing to give him.

I’m 52, have never been on the government tit. I’m not a millionaire and was unemployed for 5 months and never went on unemployment. The only way I would ever take a handout would be if I was desperate and could not feed myself. There is something called pride, remember that? Pride in oneself and how you conduct your life? I believe it’s immoral to accept help when you don’t need it. Your millionaire friend needs to take a look in the mirror and ask himself if he is living his life honorably.

I think your friend forgot what he learn in his ethic class. It’s perfectly with in the rule of the law to take this money, but sometime you have to hold yourself to a higher ethical standard. Personally, if I am a multimillionaire, I would not take the $450 a week unemployment check. That money is meant for those people that need it to feed their family and pay the rent.

We shouldn’t take networth into account when calculating unemployment. Maybe your friend has all his money tied up in real estates, then he would need the unemployment check. It’s up to each multimillionaire to make his own decision whether to take the money.

This is a difficult situation. It just seems wrong ethically for a millionaire to be receiving unemployment benefits. It is perfectly legal however. He has a point that he has paid into the system all of these years and is only reaping what he has sown. I would still say that no he shouldn’t receive them. Maybe the government can adopt a plan in which you can pay into unemployment insurance is you wish to receive benefits and that those who do not will not receive them. Just a thought!

If your friend is ambitious enough to secure an education that allows him to make enough money to become a millionaire, I doubt that he will want to be on unemployment for any length of time. Sure, he is entitled to it, but his ambition level as demonstrated by his success level will get in the way of him staying on unemployment for any length of time. Perhaps it is a social experiment for him…. to see how the other half lives so to speak.

I think that you added the extra fuel to the fire by writing so vividly that you put us in the bar right next to Greg and yourself. I’m sure that you would have garnered more empathy from your readers had the scene been set in a cold barn with Greg drinking stale milk and swatting bugs from his face while at the same time struggling to write the code for the next greatest software suite. But we couldn’t have that, could we? ;)

If he truly needs the money, he should take it. The problem is that we all have our own relative definition of the word “truly”.

He’s legally entitled to take the money, so he might as well do so. Without getting into a broader discussion, that’s how I see it with this guy. I will say that I don’t feel bad for this guy at all, and think his attitude about this in general seems very poor – based on the information given. But he’s entitled to the money, so he might as well take it. Why not?

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